Monitise Plc (MONIF) To Stay Stand-Alone; Buse Named Sole CEO

Monitise concluded its strategic review today by announcing its decision to remain an independent company, and naming Elizabeth Buse as sole CEO.

Following the strategic review, Mark Palmer and Giuliano Bologna of BTIG Research published a report Wednesday reiterating their “Buy” rating with 12-month target price pegged at GBP 52 from the current GBP 14.75.

Monitise: Lukies stepping down a ‘surprise’

As reported by ValueWalk, during a Capital Markets Day presentation last month, Monitise co-CEO Alistair Lukies indicated the mobile-money specialist “absolutely” hasn’t put itself up for sale. He reiterated that the results of the company’s strategic review thus far had provided validation of the company’s value.

However, the BTIG analysts in their today’s report indicated that though Monitise staying an independent company was not a surprise, as Lukies had emphatically indicated last month that the mobile payments provider was “absolutely” not up for sale. However, in their today’s research note the analysts point out that some investors will be surprised at the strategy review concluding with Elizabeth Buse as sole CEO of Monitise.

The analysts point out that the decision to replace Lukies was likely in response to feedback from investors unhappy with the manner in which he had managed the transition from an enterprise IT model to a subscription-based model, which included multiple guidance revisions. Moreover, the analysts note Buse’s operating experience as a senior executive at Visa makes her the right choice to take the reins at Monitise.

Buse should produce multiple contract wins

The BTIG analysts point out that though the Monitise share price came under pressure today morning, shareholder value would be maximized with the mobile payments provider remaining a stand-alone company and working to execute its strategic plan.

As outlined earlier by ValueWalk, Phase 1 of Monitise Central Platform is set to be launched on April 3. The BTIG analysts earlier noted that the mobile payments provider was finally on the verge of re-acceleration in its business expansion.

The BTIG analysts note MCP’s launch should usher in much quicker sales cycles and shorter integration times. Hence, the analysts believe the onus will be on the new CEO Buse to produce multiple contract wins in relatively short order and to demonstrate that the mobile payments provider will have longer-term relevance in the mobile money marketplace.

The BTIG analysts point out that though Monitise reaffirmed its continuous belief in its previously announced targets of 200 mm registered users and £2.50 ARPU by FYE18, the mobile-money specialist would no longer provide guidance as to the timing of the achievement of those goals, as these goals were tied to customers’ product rollouts, which are difficult to time with any certainty. The following captures Monitise’ income statement:

As the street has given a consensus for Monitise to realize 140 mm users and £1.90 ARPU, Mark Palmer and team at BTIG are not surprised at Monitise’s removal of this guidance.